Petroleum

Introduction:
Petroleum is a fuel that is often called "crude oil" or "oil." Like natural gas and coal,
petroleum is a fossil fuel. This means it was formed from the remains of plants and animals
over an extremely long period of time. Heat and pressure eventually changed the remains of
the animals into petroleum. All of the fossil fuels (petroleum, natural gas, and coal) are
nonrenewable. This means once the supply is used up, they cannot be replaced. Petroleum is
formed by hydrocarbons (a hydrocarbon is a compound made up of carbon and hydrogen)
with the addition of certain other substances, primarily sulphur. Petroleum in its natural form
when first collected is usually named crude oil, and can be clear, green or black and may be
either thin like gasoline or thick like tar.

Early History:
Petroleum, in one form or another, has been used since ancient times, and is now important
across society, including in economy, politics and technology. The rise in importance was due
to the invention of the internal combustion engine, the rise in commercial aviation, and the
importance of petroleum to industrial organic chemistry, particularly the synthesis of plastics,
fertilizers, solvents, adhesives and pesticides.
More than 4000 years ago, according to Herodotus and Diodorus Siculus, asphalt was used in
the construction of the walls and towers of Babylon, there were oil pits near Ardericca (near
Babylon), and a pitch spring on Zacynthus.Great quantities of it were found on the banks of
the river Issus, one of the tributaries of the Euphrates. Ancient Persian tablets indicate the
medicinal and lighting uses of petroleum in the upper levels of their society. By 347 AD, oil
was produced from bamboo-drilled wells in China.Early British explorers to Myanmar
documented a flourishing oil extraction industry based in Yenangyaung, that in 1795 had
hundreds of hand-dug wells under production.The mythological origins of the oil fields at
Yenangyaung, and its hereditary monopoly control by 24 families, indicate very ancient
origins.

Modern History:
In 1847, the process to distill kerosene from petroleum was invented by James Young. He
noticed a natural petroleum seepage in the Riddings colliery at Alfreton, Derbyshire from
which he distilled a light thin oil suitable for use as lamp oil, at the same time obtaining a
thicker oil suitable for lubricating machinery. In 1848 Young set up a small business refining
the crude oil.
Young eventually succeeded, by distilling cannel coal at a low heat, in creating a fluid
resembling petroleum, which when treated in the same way as the seep oil gave similar

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products. Young found that by slow distillation he could obtain a number of useful liquids
from it, one of which he named "paraffine oil" because at low temperatures it congealed into
a substance resembling paraffin wax.
The production of these oils and solid paraffin wax from coal formed the subject of his patent
dated 17 October 1850. In 1850 Young & Meldrum and Edward William Binney entered into
partnership under the title of E.W. Binney & Co. at Bathgate in West Lothian and E. Meldrum
& Co. at Glasgow; their works at Bathgate were completed in 1851 and became the first truly
commercial oil-works in the world with the first modern oil refinery, using oil extracted from
locally-mined torbanite, shale, and bituminous coal to manufacture naphtha and lubricating
oils; paraffin for fuel use and solid paraffin were not sold till 1856.Shale bings near
Broxburn, 3 of a total of 19 in West Lothian
Another early refinery was built by Ignacy ukasiewicz, providing a cheaper alternative to
whale oil. The demand for petroleum as a fuel for lighting in North America and around the
world quickly grew. Edwin Drake's 1859 well near Titusville, Pennsylvania, is popularly
considered the first modern well. Drake's well is probably singled out because it was drilled,
not dug; because it used a steam engine; because there was a company associated with it; and
because it touched off a major boom. However, there was considerable activity before Drake
in various parts of the world in the mid-19th century. A group directed by Major Alexeyev of
the Bakinskii Corps of Mining Engineers hand-drilled a well in the Baku region in 1848.
There were engine-drilled wells in West Virginia in the same year as Drake's well.An early
commercial well was hand dug in Poland in 1853, and another in nearby Romania in 1857. At
around the same time the world's first, small, oil refinery was opened at Jaso in Poland, with
a larger one opened at Ploieti in Romania shortly after. Romania is the first country in the
world to have had its annual crude oil output officially recorded in international statistics: 275
tonnes for 1857.
The first commercial oil well in Canada became operational in 1858 at Oil Springs, Ontario
(then Canada West).Businessman James Miller Williams dug several wells between 1855 and
1858 before discovering a rich reserve of oil four metres below ground.Williams extracted
1.5 million litres of crude oil by 1860, refining much of it into kerosene lamp oil.William's
well became commercially viable a year before Drake's Pennsylvania operation and could be
argued to be the first commercial oil well in North America.The discovery at Oil Springs
touched off an oil boom which brought hundreds of speculators and workers to the area.
Advances in drilling continued into 1862 when local driller Shaw reached a depth of 62
metres using the spring-pole drilling method.On January 16, 1862, after an explosion of
natural gas Canada's first oil gusher came into production, shooting into the air at a recorded
rate of 3,000 barrels per day.By the end of the 19th century the Russian Empire, particularly
the Branobel company in Azerbaijan, had taken the lead in production.Access to oil was and
still is a major factor in several military conflicts of the twentieth century, including World
War II, during which oil facilities were a major strategic asset and were extensively
bombed.Operation Barbarossa included the goal to capture the Baku oilfields, as it would
provide much needed oil-supplies for the German military which was suffering from

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blockades.Oil exploration in North America during the early 20th century later led to the U.S.
becoming the leading producer by mid-century. As petroleum production in the U.S. peaked
during the 1960s, however, the United States was surpassed by Saudi Arabia and the Soviet
Union.
Today, about 90 percent of vehicular fuel needs are met by oil. Petroleum also makes up 40
percent of total energy consumption in the United States, but is responsible for only 1 percent
of electricity generation. Petroleum's worth as a portable, dense energy source powering the
vast majority of vehicles and as the base of many industrial chemicals makes it one of the
world's most important commodities. Viability of the oil commodity is controlled by several
key parameters, number of vehicles in the world competing for fuel, quantity of oil exported
to the world market (Export Land Model), Net Energy Gain (economically useful energy
provided minus energy consumed), political stability of oil exporting nations and ability to
defend oil supply lines.
The top three oil producing countries are Russia, Saudi Arabia, and the United State.About 80
percent of the world's readily accessible reserves are located in the Middle East, with 62.5
percent coming from the Arab 5: Saudi Arabia, UAE, Iraq, Qatar and Kuwait. A large portion
of the world's total oil exists as unconventional sources, such as bitumen in Canada and oil
shale in Venezuela. While significant volumes of oil are extracted from oil sands, particularly
in Canada, logistical and technical hurdles remain, as oil extraction requires large amounts of
heat and water, making its net energy content quite low relative to conventional crude oil.
Thus, Canada's oil sands are not expected to provide more than a few million barrels per day
in the foreseeable future.
Conventional crude oil production, those having Net Energy Gain above 10 stopped growing
in 2005 at about 74 million barrels per day (11,800,000 m3/d). The International Energy
Agency's (IEA) 2010 World Energy Outlook estimated that conventional crude oil production
has peaked and is depleting at 6.8 percent per year[citation needed]. US Joint Forces
Command's Joint Operating Environment 2010 issued this warning to all US military
commands "By 2012, surplus oil production capacity could entirely disappear, and as early as
2015, the shortfall in output could reach nearly 10 million barrels per day.

Composition:
In its strictest sense, petroleum includes only crude oil, but in common usage it includes all
liquid, gaseous, and solid hydrocarbons. Under surface pressure and temperature conditions,
lighter hydrocarbons methane, ethane, propane and butane occur as gases, while pentane and
heavier ones are in the form of liquids or solids. However, in an underground oil reservoir the
proportions of gas, liquid, and solid depend on subsurface conditions and on the phase
diagram of the petroleum mixture.

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An oil well produces predominantly crude oil, with some natural gas dissolved in it. Because
the pressure is lower at the surface than underground, some of the gas will come out of
solution and be recovered (or burned) as associated gas or solution gas. A gas well produces
predominantly natural gas. However, because the underground temperature and pressure are
higher than at the surface, the gas may contain heavier hydrocarbons such as pentane, hexane,
and heptane in the gaseous state. At surface conditions these will condense out of the gas to
form natural gas condensate, often shortened to condensate. Condensate resembles petrol in
appearance and is similar in composition to some volatile light crude oils.
The proportion of light hydrocarbons in the petroleum mixture varies greatly among different
oil fields, ranging from as much as 97 percent by weight in the lighter oils to as little as 50
percent in the heavier oils and bitumens.
The hydrocarbons in crude oil are mostly alkanes, cycloalkanes and various aromatic
hydrocarbons while the other organic compounds contain nitrogen, oxygen and sulfur, and
trace amounts of metals such as iron, nickel, copper and vanadium. The exact molecular
composition varies widely from formation to formation but the proportion of chemical
elements vary over fairly
narrow limits as follows:

Crude oil varies greatly in appearance depending on its composition. It is usually black or
dark brown (although it may be yellowish, reddish, or even greenish). In the reservoir it is
usually found in association with natural gas, which being lighter forms a gas cap over the
petroleum, and saline water which, being heavier than most forms of crude oil, generally
sinks beneath it. Crude oil may also be found in semi-solid form mixed with sand and water,
as in the Athabasca oil sands in Canada, where it is usually referred to as crude bitumen. In
Canada, bitumen is considered a sticky, black, tar-like form of crude oil which is so thick and
heavy that it must be heated or diluted before it will flow. Venezuela also has large amounts
of oil in the Orinoco oil sands, although the hydrocarbons trapped in them are more fluid than
in Canada and are usually called extra heavy oil. These oil sands resources are called
unconventional oil to distinguish them from oil which can be extracted using traditional oil

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well methods. Between them, Canada and Venezuela contain an estimated 3.6 trillion barrels
(570109 m3) of bitumen and extra-heavy oil, about twice the volume of the world's reserves
of conventional oil.
Petroleum is used mostly, by volume, for producing fuel oil and petrol, both important
"primary energy" sources.84 percent by volume of the hydrocarbons present in petroleum is
converted into energy-rich fuels (petroleum-based fuels), including petrol, diesel, jet, heating,
and other fuel oils, and liquefied petroleum gas.The lighter grades of crude oil produce the
best yields of these products, but as the world's reserves of light and medium oil are depleted,
oil refineries are increasingly having to process heavy oil and bitumen, and use more
complex and expensive methods to produce the products required. Because heavier crude oils
have too much carbon and not enough hydrogen, these processes generally involve removing
carbon from or adding hydrogen to the molecules, and using fluid catalytic cracking to
convert the longer, more complex molecules in the oil to the shorter, simpler ones in the fuels.

Extraction of petroleum:

1-Locating the oil field:

Geologists use seismic surveys to search for geological structures that may form oil
reservoirs. The "classic" method includes making an underground explosion nearby and
observing the seismic response that provides information about the geological structures
under the ground. However, "passive" methods that extract information from naturallyoccurring seismic waves are also known.
Other instruments such as gravimeters and magnetometers are also sometimes used in the
search for petroleum. Extracting crude oil normally starts with drilling wells into the
underground reservoir. When an oil well has been tapped, a geologist (known on the rig as
the "mudlogger") will note its presence. Such a "mudlogger" is known to be sitting on the rig.
Historically, in the USA, some oil fields existed where the oil rose naturally to the surface,
but most of these fields have long since been used up, except in certain places in Alaska.
Often many wells (called multilateral wells) are drilled into the same reservoir, to ensure that
the extraction rate will be economically viable. Also, some wells (secondary wells) may be
used to pump water, steam, acids or various gas mixtures into the reservoir to raise or
maintain the reservoir pressure, and so maintain an economic extraction rate.

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2-Drilling:
The oil well is created by drilling a long hole into the earth with an oil rig. A steel pipe
(casing) is placed in the hole, to provide structural integrity to the newly drilled well bore.
Holes are then made in the base of the well to enable oil to pass into the bore. Finally a
collection of valves called a "Christmas Tree" is fitted to the top, the valves regulating
pressures and controlling flows.

3-Oil extraction and recovery:

i-Primary Recovery:
During the primary recovery stage, reservoir drive comes from a number of natural
mechanisms. These include: natural water displacing oil downward into the well, expansion
of the natural gas at the top of the reservoir, expansion of gas initially dissolved in the crude
oil, and gravity drainage resulting from the movement of oil within the reservoir from the
upper to the lower parts where the wells are located. Recovery factor during the primary
recovery stage is typically 5-15%.
While the underground pressure in the oil reservoir is sufficient to force the oil to the surface,
all that is necessary is to place a complex arrangement of valves (the Christmas tree) on the
well head to connect the well to a pipeline network for storage and processing. Sometimes
pumps, such as beam pumps and electrical submersible pumps (ESPs), are used to bring the
oil to the surface; these are known as artificial lift mechanisms.

ii-Secondary Recovery:
Over the lifetime of the well the pressure will fall, and at some point there will be insufficient
underground pressure to force the oil to the surface. After natural reservoir drive diminishes,
secondary recovery methods are applied. They rely on the supply of external energy into the
reservoir in the form of injecting fluids to increase reservoir pressure, hence replacing or
increasing the natural reservoir drive with an artificial drive. Secondary recovery techniques
increase the reservoir's pressure by water injection, natural gas reinjection and gas lift, which
injects air, carbon dioxide or some other gas into the bottom of an active well, reducing the
overall density of fluid in the wellbore. Typical recovery factor from water-flood operations is
about 30%, depending on the properties of oil and the characteristics of the reservoir rock. On
average, the recovery factor after primary and secondary oil recovery operations is between
35 and 45%.
iii-Tertiary Recovery:

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Tertiary, or enhanced oil recovery methods increase the mobility of the oil in order to increase
extraction.
Thermally enhanced oil recovery methods (TEOR) are tertiary recovery techniques that heat
the oil, thus reducing its viscosity and making it easier to extract. Steam injection is the most
common form of TEOR, and is often done with a cogeneration plant. In this type of
cogeneration plant, a gas turbine is used to generate electricity and the waste heat is used to
produce steam, which is then injected into the reservoir. This form of recovery is used
extensively to increase oil extraction in the San Joaquin Valley, which has very heavy oil, yet
accounts for 10% of the United States' oil extraction.[citation needed] Fire flooding (In-situ
burning) is another form of TEOR, but instead of steam, some of the oil is burned to heat the
surrounding oil.
Occasionally, surfactants (detergents) are injected to alter the surface tension between the
water and oil in the reservoir, mobilizing oil which would otherwise remain in the reservoir
as residual oil.
Another method to reduce viscosity is carbon dioxide flooding.
Tertiary recovery allows another 5% to 15% of the reservoir's oil to be recovered.In some
California heavy oil fields, steam injection has doubled or even tripled the oil reserves and
ultimate oil recovery.For example, see Midway-Sunset Oil Field, California's largest oilfield.
Tertiary recovery begins when secondary oil recovery isn't enough to continue adequate
extraction, but only when the oil can still be extracted profitably. This depends on the cost of
the extraction method and the current price of crude oil. When prices are high, previously
unprofitable wells are brought back into use and when they are low, extraction is curtailed.
Microbial treatments is another tertiary recovery method. Special blends of the microbes are
used to treat and break down the hydrocarbon chain in oil thus making the oil easy to recover
as well as being more economic versus other conventional methods. In some states, such as
Texas, there are tax incentives for using these microbes in what is called a secondary tertiary
recovery. Very few companies supply these, however companies like Bio Tech, Inc. have
proven very successful in waterfloods across Texas.

4-Recovery rates and factors:

The amount of oil that is recoverable is determined by a number of factors including the
permeability of the rocks, the strength of natural drives (the gas present, pressure from
adjacent water or gravity), and the viscosity of the oil. When the reservoir rocks are "tight"
such as shale, oil generally cannot flow through but when they are permeable such as in
sandstone, oil flows freely. The flow of oil is often helped by natural pressures surrounding
the reservoir rocks including natural gas that may be dissolved in the oil (see Gas oil ratio),
natural gas present above the oil, water below the oil and the strength of gravity. Oils tend to

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span a large range of viscosity from liquids as light as gasoline to heavy as tar. The lightest
forms tend to result in higher extraction rates.

Main Petroleum Products:

1-Asphalt:
Asphalt also known as bitumen. It is a sticky, black and highly viscous liquid or semi-solid
form of petroleum. It may be found in natural deposits or may be a refined product; it is a
substance classed as a pitch. Until the 20th century, the term asphaltum was also used.
The primary use of asphalt/bitumen is in road construction, where it is used as the glue or
binder mixed with aggregate particles to create asphalt concrete. Its other main uses are for
bituminous waterproofing products, including production of roofing felt and for sealing flat
roofs.

2-Diesel fuel:
Diesel fuel in general is any liquid fuel used in diesel engines. The most common is a specific
fractional distillate of petroleum fuel oil, but alternatives that are not derived from petroleum,
such as biodiesel, biomass to liquid (BTL) or gas to liquid (GTL) diesel, are increasingly
being developed and adopted. To distinguish these types, petroleum-derived diesel is
increasingly called petrodiesel.Ultra-low-sulfur diesel (ULSD) is a standard for defining
diesel fuel with substantially lowered sulfur contents. As of 2007, almost all diesel fuel
available in the United States of America, Canada and Europe is the ULSD type.

3-Gasoline:
Gasoline is a transparent, petroleum-derived liquid that is used primarily as a fuel in internal
combustion engines. It consists mostly of organic compounds obtained by the fractional
distillation of petroleum, enhanced with a variety of additives. Some gasolines also contain
ethanol as an alternative fuel. In North America, the term gasoline is often shortened in
colloquial usage to gas. Elsewhere petrol is the common name in the United Kingdom,
Republic of Ireland, Australia and in most of the other Commonwealth countries.

4-Jet fuel:

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Jet fuel or aviation turbine fuel (ATF) is a type of aviation fuel designed for use in aircraft
powered by gas-turbine engines. It is colourless to straw-colored in appearance. The most
commonly used fuels for commercial aviation are Jet A and Jet A-1, which are produced to a
standardized international specification. The only other jet fuel commonly used in civilian
turbine-engine powered aviation is Jet B, which is used for its enhanced cold-weather
performance.

5-Kerosene:
Kerosene is a combustible hydrocarbon liquid. The name is derived from Greek:(keros)
meaning wax. The word "Kerosene" was registered as a trademark by Abraham Gesner in
1854, and for several years, only the North American Gas Light Company and the Downer
Company (to which Gesner had granted the right) were allowed to call their lamp oil
"Kerosene" in the United States.It eventually became a genericized trademark. It is
sometimes spelled kerosine in scientific and industrial usage.The term "kerosene" is common
in much of Canada, the United States, Australia and New Zealand.
Kerosene is usually called paraffin in the UK, Ireland, Southeast Asia and South Africa. A
more viscous paraffin oil is used as a laxative. A waxy solid extracted from petroleum is
called paraffin wax. Kerosene is widely used to power jet engines of aircraft (jet fuel) and
some rocket engines, but is also commonly used as a cooking and lighting fuel and for fire
toys such as poi. In parts of Asia, where the price of kerosene is subsidized, it fuels outboard
motors on small fishing boats.

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Research
INTRODUCTION OF SHELL PAKISTAN Ltd.

HISTORY
Shell is a multinational company and in Pakistan it is operating as a public limited company
by the name Shell Pakistan Ltd.
Shell is a superior brand name with a 100 year history in this region, infect the company is
still in possession of a fuel storage tank from 1899. However, the documented history of the
Royal Dutch/shell group the Indo-Pak subcontinent dates back to 1903 when a partnership
was struck between the shell transport and trading company and the Royal Dutch petroleum
company to supply petroleum products in Asia.
In 1928 to enhance their distribution capabilities, the marketing interests of the Royal
Dutch/shell group and Burmah Oil Company by limited in India were merged and the
Burmah shell oil storage distribution and storage company of India was born. After the
independence of Pakistan in 1947, the name was changed to the Burmah shell oil distribution
company of Pakistan.
In 1970, when 51% of the shareholding was transferred to Pakistani invertors. The name of
the company changed to Pakistan Burmah shell (PBS) limited. The shell and Burmah groups
of retained the remaining 49% in equal proportions. In February of 1993, as a result of a
decision by Burmah oil to divest in Pakistan and the deregulation policy of the government,
the shell petroleum company bought the shares of Burmah Oil Company and 2% shares from
the market and become the major shareholder in the shell Pakistan limited (SPL).
Shell launched a change programme, which will transform the company by the turn of the
century, with major implications for the petroleum industry in Pakistan.
More subtle, but equally uncompromising, has been the change in the companys culture to
reflect the values which shell internationally believes will bring commercial success through
a greater focus on the customers.

COMPANYS SLOGAN/MISSION
You can be sure of Shell.

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COMPANYS OBJECTIVE
Shell is focusing on retailing, providing better facilities to customers, clean petrol pumps
constructing international standard petrol filling stations, good advertising campaigns and
mini markets (select).

VISION OF SHELL
To be the top performer of first choice.

AIM OF SHELL
Creating a secure business environment, minimizing economic losses, and business
disruptions safeguarding the groups integrity and reputations.

GOAL OF SHELL
The goal of the company is to position itself as the preferred oil company in Pakistan, leading
the field in its commitment to safety, customer service, quality and environmental protection.

STRATEGIES OF SHELL
A strategy of corporation forms a comprehensive master plan stating how the corporation will
achieve its mission and objectives. It maximizes competitive advantage and minimizes
competitive disadvantage.
The strategy of Shell is to grow internally by expanding its operations through acquisition
and strategic alliances.Shell focuses to differentiate its products from competitors in the area
of quality and services.

POLICIES
A policy is a broad guideline for decision-making that links the formulation of strategy with
its implementation
The policy of Shell is to make sure that the employees throughout the firm make decisions
and take actions that support the corporations mission, objectives, and strategies.

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STRATEGIC MANAGEMENT
There is a strong case of linkage good management to how well managers craft and execute
strategy. Some managers design shrewd strategies but fail to carry them out well. Others
design mediocre strategies but execute them competently. Both situation
performance despite unforeseeable events, potent competition, and internal problems.

THE FIVE TASKS OF STRATEGIC MANAGEMENT

The strategy making, strategy-implementing process consists of five interrelated managerial
tasks.
1. Deciding what business the company will be in and forming a strategy vision of
where the organization needs to be headed.
2. Converting the strategic vision and mission into measurable objective and
performance targets.
3. Crafting a strategy to achieve the desire results.
4. Implementing and executing the chosen strategy efficiently and effectively.
5. Evaluating performance reviewing new developments, and initiating corrective
adjustments in long-term direction objectives.

WHY COMPANY STRATEGIES EVOLVE

Frequently fine tuning and tweaking of a company strategy. First in one department or
functional area and then in another, are quite normal. On occasion, quantum changes in
strategy are called for when a competitor makes a dramatic move, when technological
breakthroughs occur or when crises strikes and managers are forced to makes a radical
strategy alteration very quickly. Because strategy move and new action approaches are
ongoing across the business.
An organizations strategy forms over a period of time and then reform the number of
changes begins to mount. Current strategy is typically a blend of holdover approaches fresh
actions and reactions, and potential moves in the planning stage. Except for crises situations
(where many strategy moves are often made quickly to produce a substantially new strategy
almost overnight) and new company starts - ups (where strategy exists mostly in the form of
plans and intended actions), it is common for key elements of company to emerge in bits and
pieces as the business develops.

WHAT DOES A COMPANYS STRATEGY CONSIST OF?

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Companys strategies concern how: how to grow the business, how to satisfy customers, how
to auto compete rivals, how to response to changing market conditions, how to manage each
functional piece of business, how to achieve strategic and financial objectives.

STRATEGY AND STRATEGIC PLANS

Developing a strategic vision and mission, establishing objectives, and deciding on a strategy
are basic direction-setting tasks. They map out where the organization is headed, its short
range and long-range performance targets, and the competitive moves and internal action
approaches to be used in achieving the targeted results. Together, they constitute a strategic
plan.
Annual strategic plan seldom anticipate all the strategically relevant events that will transpire
in the next 12 months. Unforeseen events, unexpected opportunities or threats, plus the
constant bubbling up of new proposal encourages managers to modify planned actions forge
unplanned reactions postponing the redrafting of strategy until its time to work on next
years strategic plan is both foolish and unnecessary.

STRATEGY IMLEMENTATIONAL EXECUTION

The administrative is to create fits between the way things are done and what it takes for
effective strategy execution. The stronger the fits the better the execution strategy. The most
important fits are between strategy organizational capabilities, between strategy and reward
structure between strategy and internal support system, and between strategy and the
organization culture.
The strategic implementing task is easily the most compacted and time-consuming part of
strategic management. It cut across virtually all facts of managing and must be initiated from
many points inside the organization. The strategy implementers agenda for action emerges
from careful assessment of what the organization must do differently and better to carry out
the strategic plan proficiently. Each manager has to think how much internal practices deviate
from what the strategy requires and how well strategy and organizational culture already
match.
As needed changes and identified, management must supervise all the details of
implementation and apply enough pressure on the organization to convert objectives into
results. Depending on the amount of internal change involved, full implementation can take
several moths to several years.

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WHY STRATEGIC MANAGEMENT IS AN ONGOING PROCESS

Because each one of the five tasks of strategic management requires constant evaluation and
a decision whether to continue or change, a manager cannot afford distraction. Nothing about
the strategic management process is final all prior actions are subject to modification as
conditions in the surrounding of environment change and ideas for improvement emerge,
strategic management is a process filled with motion. Changes in the organization situation,
either from the inside or outside or both, fuel the need for strategic adjustments.
The task of evaluating performance and initiating corrective adjustments is both the end and
the beginning of the strategic management cycle. The match of the external and internal
events, grant that revision in mission, objective, strategy and implementation will be needed
sooner or later. It is always incumbent on management to push for better performance to find
ways to improve the existing strategy and how it is being executed. Changing external
conditions add further impetus to the need for periodic revisions in a companys mission.
Performance adjustment objective, strategy and approaches to strategy execution.
Adjustments usually involve fine-tuning. But occasions for major strategic re-orientation do
arise some time prompted by significance external development and sometimes by sharply
sliding financial performance. Strategy managers must stay close enough to the situation to
detect when changing conditions require a strategic response and when they dont. It is their
job to scene the winds of change, recognize changes early, and initiate adjustments.

THE BENEFITS OF A STRATEGY APPROACH TO MANAGING

Today managers have to think strategically about their companys position and impact of
changing conditions. They have to monitor the external; solution closely enough to know
what kind of strategic changes to initiate. Simply said, fundamentals of strategic management
cede to drive the whole approach to managing organizations.
The advantages of first-rate strategic thinking and conscious strategic management include:
Providing better guidance to the entire organization on the crucial point of what it is trying
to do and to achieve.
Making managers more alert to the winds of change, new opportunities and threatening
development.
Providing managers with a rationale for evaluating competing budget requests for investment
capital and new staff a rationale that argues strongly for steering resources into strategysupportive results producing areas.
Helping to unify the numerous related decisions by managers across the organization.

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Creating a more proactive management posture and counteracting tendencies for decisions to
be reactive and defensive.

EXTERNAL ENVIRONMENT
For the analysis of external environment following are important factors (PEST):

Political legal forces

Economic forces
Socio cultural forces
Technological forces

POLITICAL FORCES:
In Pakistan there are rapid changes of Government since poison. Each government that came
in power condemned the planning work done by the precious government. The slow
development due to political instability but now the present government is very stable to
grow because govt. is providing incentives to different industries.
LEGAL FORCES:
Legal component consists of legislation that has been passed. This component prescribes
rules or laws that all members of society must follow e.g. labour policy, employees social
security scheme 1965 Partnership Act 1932 company 1984.

ECONOMIC FORCES:
In Pakistan GNP is 5.41 and inflation rate is very high which is 12.7. The balance of payment
position in Pakistan is -3.5%. The employment rate is 34.94 million.

SOCIO CULTURAL FORCES:

In Pakistan population is increasing and social values are also changing so the demand of fuel
consumption is also increasing. People are coming from rural areas to cities and their life
style and values are also changing. They are using modern technology like care, motor cycle
for traveling.

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Pakistan's attempt to raise the living standards of its citizens has meant that economic
development has largely taken precedence over environmental issues.
Unchecked use of hazardous chemicals, vehicle emissions, and industrial activity has
contributed to a number of environmental and health hazards, chief among them being water
pollution. Much of the country suffers from a lack of potable water due to industrial waste
and agricultural runoff that contaminates drinking water supplies. Poverty and high
population growth have aggravated, and to a certain extent, caused, these environmental
problems.

TECHNOLOGICAL FORCES:
Pakistan environment regarding the technology is not very advance due to the lack of
resources.Natural gas, because of its environmental qualities, efficiency, and technological
advances are going to play an increasingly important role in meeting demand for clean
energy.

TASK ENVIRONMET
Customer

Supplier
Labor component
Competitors
Government

CUSTOMER:
Our customers are high class, low class and also middle class, because every class is used
petrol for consumption.

SUPPLIER:
Our suppliers are Pakistan refinery, National refinery and Attock refinery and Dhodak
refinery.

LABOUR COMPONENT:

Petroleum

17

Labour is frequently available in Pakistan because of high unemployment rate. So skilled and
unskilled persons are available at lower wages rate.

COMPETITORS:
Major competitors of Shell are PSO with petrol pumps and Caltex with petrol pumps. But
Shell Pakistan Limited operates in the Petroleum refining sector. Shell Pakistan Limited also
compete with three other petroleum refiners in Asia
Chennai Petroleum Corporation Limited
National Refinery Limited
Mangalore Ref & Petrochemicals Limited

INTERNAL ENVIRONMENT

Organization Structure
Organization Culture

ORGANIZATION STRUCTURE:
Shell is the largest multinational organization with many product lines. Employees tend to be
functional specialists organized according to market/product distinction.
Shell Pakistan is divided into five functional areas i.e. Retail, Commercial, Operations,
Finance, and Human Resources.
Management attempts to find synergy among divisional activities through the use of
committees and horizontal linkages.
Decision of major impact result from strategic plans made by organizational staff

ORGANIZATION CULTURE:
Quality is the key ingredient and commitment to quality is share by executives and workers.
The organizational Culture of the Shell is based on commitment of the top management for
quality, employees, local community, innovation, and performance.